Cantor Adopts Cautious Stance on Israeli Chip Stocks Nova and Camtek
Investment bank Cantor Fitzgerald prefers to avoid Israeli chip inspection firms Nova and Camtek after recent double-digit pullbacks, highlighting growth concerns and favoring alternative semiconductor equipment stocks.
Analyst Matthew Prisco from investment bank Cantor Fitzgerald assesses whether Israeli chip inspection companies Nova and Camtek present an investment opportunity after suffering double-digit declines from their yearly peaks. Nova has dropped approximately 39% since its peak in June, while Camtek has fallen about 27% following its peak a few weeks earlier. Both stocks are part of the TA-35 index, with Nova weighting around 4% and Camtek around 1.5%.
Sector Correction and Analyst Perspective
Prisco notes that semiconductor equipment sector stocks have declined by an average of 33% since late June, outpacing the 18% drop in the Philadelphia Semiconductor Index (SOXX), following previous impressive gains of 191% for sector stocks and 101% for the index. He attributes these declines to investor concerns that expectations for the chip equipment market are overly elevated, relative valuations compared to compute and memory stocks, and a lack of near-term catalysts to support another rally.
"While AI infrastructure building is durable and ongoing, the pace of change matters, and we see differentiation among companies in the sector," notes Matthew Prisco.
Outlook for Nova and Camtek
Regarding Camtek, Prisco expects upcoming earnings to slightly exceed forecasts with moderate guidance raises, but remains cautious due to growth rates relative to the broader equipment market and competition concerns. For Nova, he anticipates a slight operational improvement post-earnings without major surprises. Market share gains and new product adoption remain positive catalysts, though slower growth relative to advanced packaging markets could weigh on the stock.
Preferred Industry Alternatives
Instead of Nova and Camtek, Cantor prefers stocks combining exposure to accelerated chip equipment investment and forecast upside, specifically highlighting MKS Instruments, Onto Innovation, and Advanced Energy Industries. As of today, Wall Street Journal data indicates average analyst price targets imply a 43.8% premium for Nova and a 22.5% premium for Camtek.
